The new Slovenian law on takeovers has been adopted, with the principle goal of implementing Directive 2004/25/EC on takeover bids. Although it follows the main principles of the former Slovenian law on takeovers, the new Takeover Act provides a highly structured set of takeover rules, resolving the ambiguities of the former law. Also, some of the guiding principles were given greater priority, such as the protection of minority shareholders. The Takeover Act includes an elaborate provision on acting in concert, the scope of its application is extended to certain non-public corporations, the threshold limits requiring a mandatory bid for all shares remain low, and buyout remedies are provided for minority shareholders. Lastly, the Takeover Act did away with provisions that were drafted for the specific economic circumstances of a country undergoing a transition process, providing special status to certain quasi state funds.
Scope of application
The Takeover Act applies to all public corporations whose shares carry the right to vote and are traded on the regulated market. Unlike the Directive, the Takeover Act extends the scope of its application to non-public corporations that have their registered office in the Republic of Slovenia and that, as of the last day of the year relevant for assessing the application of the Takeover Act, have more than 250 shareholders and at least Tr1 billion ($5 million) in registered share capital.
The mandatory bid
The takeover threshold that triggers an obligation to launch a mandatory takeover bid with respect to all of the shares of a company is 25% of the voting rights of the target company.
In line with the Directive, the law provides that the price offered for the shares must not be lower than the highest price for which the offeror acquired the securities during the year preceding the announcement of the takeover bid.
Acting in concert
The Takeover Act introduces elaborate provisions on when parties are considered to be acting in concert, to determine whether or not they have jointly attained the threshold limits obliging them to make a public takeover bid. There is a rebuttable presumption that the following parties act in concert with each other: (i) parties connected by certain circumstances present in the securities' acquisition; (ii) members of the management or of supervisory corporate bodies of the parties acting in concert with each other; (iii) members of the management or of supervisory bodies together with entities in which such members are members of their corporate bodies; (iv) close family members; and (v) entities that have brought about – through proposing and voting in favour of – the adoption of a resolution at the general meeting whose adoption required a qualified majority. There is an irrebuttable presumption that the following parties act in concert with each other: (i) a controlled and controlling entity; (ii) entities that are dependent upon the same controlling entity; and (iii) a management company and the investment fund managed by it. If the parties acting in concert have jointly reached the threshold limit, they must, unless agreed otherwise, jointly make a takeover bid, and they are jointly and severally liable for all acts committed in connection with the takeover.
Defensive tactics by management
Slovenia has taken a partial opt-in approach to whether the management and supervisory corporate bodies may use defensive tactics and breakthrough provisions as provided in the Directive. Following the approach of the former Takeover Act, the new Takeover Act prohibits the use of defensive tactics on the part of the management without the prior authorization of the general meeting of a company. The new Takeover Act, however, contains some novel provisions, such as the different time limit in which the general meeting must be summoned when deciding on defensive tactics and a provision requiring the general meeting's approval of not fully implemented decisions made before the period in which a takeover bid is launched.
Unlike the defensive tactics used by management that are deemed to be illegal, the preexisting anti-takeover defences provided in the articles of association, shareholder agreements, and agreements made between a company and its shareholders are not prohibited, and the companies may determine whether or not such provisions will be effective in the course of the takeover. If breakthrough provisions are in place, they will be effective during the takeover procedure unless the general meeting votes to disregard the provisions by adopting a resolution to amend the articles of association.
Markus Bruckmüller and Jelena Hrle
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